On March 30, 2006, Standard&Poor's Ratings Services lowered its ratings on carbonless and specialty paper producer Appleton Papers Inc., including the corporate credit rating to 'BB-' from 'BB'. The outlook is stable. At the same time, Standard&Poor's raised its recovery rating on the company's secured bank facility to '2' from '3', indicating expectations of substantial recovery (80%-100%) of principal in the event of a payment default. The downgrade reflects credit measures that remain weaker than Standard&Poor's had been expecting for Appleton. Despite lower-than-expected declines in carbonless paper demand, higher carbonless paper prices, and potential growth prospects for Appleton's performance packaging and thermal segments, Standard&Poor's did not foresee sufficient improvement in Appleton's financial
